PCP vs HP vs leasing: car finance explained
How PCP, hire purchase and personal leasing work, what each really costs, and which suits premium car buyers.
Written by the SellMyPremiumCar valuation team · Reviewed against live UK market data · Updated October 2026
PCP gives you lower monthly payments with an optional final balloon payment to own the car. HP spreads the full cost, so you own the car at the end. Leasing (PCH) is a long-term rental with no option to buy. PCP suits people who change cars every few years, HP suits long-term owners, and leasing suits people who never want to own.
- PCP
- Lowest monthly payment with an option to buy
- HP
- Own the car outright at the end
- PCH
- Rental only, with no option to own
- ≈90%
- Share of new private cars bought on finance (FLA)
PCP explained
You pay a deposit, monthly payments and an optional balloon (GFV). At the end, you can pay the balloon, hand the car back or part-exchange it. Mileage limits apply.
HP explained
The whole price is spread over the term. Monthly payments are higher, but you own the car at the end and there are no mileage limits.
Leasing explained
You pay a fixed monthly rental. Mileage and condition rules apply, and you hand the car back at the end.
Step by step
- 1
Decide how long you'll keep it
Under 4 years suits PCP or leasing, longer suits HP.
- 2
Compare total cost
Look beyond the monthly payment.
- 3
Get real quotes
Compare lenders through Car Finance Match.
Glossary
- GFV:
- Guaranteed Future Value: the PCP balloon
- APR:
- Annual Percentage Rate: the yearly cost of borrowing
- PCH:
- Personal Contract Hire: leasing
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Sources & methodology
Figures are indicative and based on UK market data and official guidance, reviewed by our valuation team. Prices vary with specification, condition and market conditions.